September 21, 2001 3:15 PM PDT

Microsoft tight-lipped about Xbox delay

Microsoft is keeping mum about its decision Friday to delay the release of its Xbox video game console by a week. Regardless, the postponement again puts the machine back-to-back with the U.S. introduction of Nintendo's GameCube.

The Xbox will now launch Nov. 15, not Nov. 8 as originally planned. Microsoft would not cite a reason for the delay.

"We looked at a lot of different factors," said James Bernard, Microsoft's main Xbox spokesman. "This turned out to be the best time to launch for us, for our partners and our customers."

Microsoft is also being vague about the number of consoles it will release at launch. The software giant originally promised that 600,000 to 800,000 consoles would be available at launch, as the company hoped to avoid the shortages and frustration that accompanied the U.S. arrival of Sony's PlayStation 2 console last fall.

Now Microsoft will only specify that 1 million to 1.5 million units will ship through the holiday shopping season, and that the company will be able to deliver to stores at least 100,000 new units per week after the launch.

"What we're focusing on is our holiday numbers...and replenishment in the channel every week," Bernard said, adding that production has started at the main Xbox assembly plant in Guadalajara, Mexico

Robbie Bach, Microsoft's chief Xbox officer, noted in a statement that the Xbox is the only game console being manufactured in North America. "This is significant because it assures retailers that we can keep filling the retail channel with new Xbox units week after week," he said.

Despite the delay, Gartner analyst P.J. McNealy said, Xbox will still be on the market in plenty of time for holiday shoppers--Microsoft's main priority.

"I don't think the effect is that great from the consumer perspective," he said. "From the industry standpoint, it's another black eye. It's pretty obvious that nobody can deliver hardware on time anymore."

Microsoft's vagueness regarding the reason for the delay and its refusal to specify launch quantities could mean the company is dealing with a potentially embarrassing hardware issue.

Last month, Microsoft denied a report from investment banking firm Thomas Weisel Partners that flaws in the Xbox's motherboard could delay production of finished units.

"They're being pretty tight-lipped about it," McNealy said. "The bottom line is it's a safe bet it's some kind of production issue."

Competitor Nintendo announced last month that it was delaying the U.S. debut of its new GameCube console by nearly two weeks. The GameCube is now set to arrive in North America with 700,000 units on Nov. 18.

McNealy asserts that the proximity of the two launch dates will mainly be a problem for retailers and Nintendo, which must compete with Microsoft's $500 million Xbox marketing campaign.

"This pushes the marketing noise closer to Nintendo's launch, and that's going to be a real issue for Nintendo," he said.

 

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